Good morning, here’s your morning takeout from the Street:
- Bank of America (NYSE: BAC): Analysts expect the coming earnings announcement to offer less clarity on the company’s mortgage related issues than it originally expected. Lowering operating earnings per share to $0.19 from $0.24, but still expect a loss for the year. Credit default spreads continue to widen.
- Barnes and Noble (NYSE: BKS): Lowering revenue expectations for the firm as Amazon readies to launch its e-readers nationally. Barclays expects the book store to lower prices of its Nook 1st Edition to $79, which will hit revenue by $200 million, bringing it to $1.6 billion. 2012 results to come in 10 cents lower at a loss of $0.60 a share.
- Capital One Financial (NYSE: COF): Expecting recently acquired card businesses from HSBC and ING Direct to lift earnings for the quarter to $1.73 versus street consensus of $1.68. Growth also fuelled by a resurgence in auto finance and commercial lending.
- Citigroup (NYSE: C): Bank continuing to shift to retail provider and is de-leveraging its legacy assets. Analysts see trading weakness and lower investment banking fees to negatively impact earnings and are lowering earnings estimates for the year to $3.90 from $4.05. However, asset quality should continue to improve, with non performing loans and net charge offs declining by 10% or more.
- Price Changes: Increases: Limited Brands ($42.00 new v. $38.00 old), Sherwin-Williams ($80.00 new v. $78.00 old); Decreases: Fifth Third Bancorp ($11.00 new v. $12.00 old), Goldman Sachs Group, Inc. ($125.00 new v. $140.00 old), JP Morgan Chase ($44.00 new v. $48.00 old), Wells Fargo & Co ($27.00 new v. $29.00 old).
- Eastman Kodak (NYSE: EK): Kodak is unlikely to sell its digital patent portfolio by year’s end, which will pose a significant risk to liquidity. Citi is cutting its price target to $1.00. On the positive side, the firm’s ink jet sales grew by 50% in the second quarter – far outpacing the market.
- Rail Roads: Even against strong macroeconomic headwinds, carloads during week 39 marked a year-to-date high at just under 697k. The five highest weekly carload volumes on a year-to-date basis have occurred since mid-August.
- MetLife (NYSE: MET): Announced it would incur charges of $235-$275 million, primarily on claim reconciliation with the Social Security Administration’s Death Master File.
- Initiations: Accenture Plc (Buy, target $71), Computer Sciences Corp (Hold, target $30), cognisant (Buy, target $85), Genpact (Hold, target $18), Visa Inc. (Buy, target $107), MasterCard (Buy, target $415), Total System Services (Buy, target $22), Automatic Data Processing (Hold, target $52), Paychex (Hold, target $28), Fidelity National (Hold, target $28), Global Payments Inc. (Buy, target $53), Western Union (Hold, target $19), Verifone (Hold, target $40).
- Luxury Goods: Deutsche Bank is cutting 2012 forecasts by 8%, primarily on concerns that a decelerating China will negatively impact the category. Price targets lowered on LVMH, the owner of Louis Vuitton, Marc Jacobs, and Moet champagne, and PPR, the owner of Gucci, Alexander McQueen, and Puma, to €125 and €120, respectively.
- Alcoa (NYSE: AA): Expecting Alcoa to report diluted earnings per share of $0.24, lower mainly on declining aluminium prices. Third quarter earnings expected to drop 10% quarter-on-quarter to $937 million. Primary metal sales volume to grow 4% to 754k tons in the quarter on U.S. restarts.
- Initiations: Overweight ratings on Disney (NYSE: DIS), Time Warner (NYSE: TWX), and Viacom (NYSE: VIA) and a Neutral rating on Discovery (NASDAQ: DISCA). Sees strong cable revenue growth and advertising revenue to hold up well into 2012.
- Specialty Retail: October ’11 estimates of same-store sales – Abercrombie & Fitch (NYSE: ANF) 7 to 9% growth, Aeropostale (NYSE: ARO) -10 to -12% growth, American Eagle Outfitters (NYSE: AEO) 6 to 8% growth, Ann Taylor (NYSE: ANN) 5 to 7% growth, Chico’s (NYSE: CHS) 4 to 6% growth, Children’s Place (NASDAQ: PLCE) -1 to -3% growth, Coach, Inc. U.S. (NYSE: COH) 6 to 8% growth, Men’s Wearhouse U.S. (NYSE: MW) 2 to 4% growth, rue21 (NASDAQ: RUE) 1 to 3% growth, Tiffany & Co. U.S. (NYSE: TIF) 10 to 12% growth, Urban Outfitters (NASDAQ: URBN) -1 to -3% growth.
- Hardware and Servers: Morgan expects server growth of 4% in 2011 on a number of headwinds, partly on Intel’s delay on its Romley platform – will present issues for HP and Dell.
- Express Scripts (NASDAQ: ESRX): Management lowered 2011 guidance, and announced guidance in a S-4 filing. Firm sees earnings grown of 8.2% in 2014, on an improving viability of its Pharmacy Benefit Management division.
- Auto Suppliers: A UBS survey found that 78% of suppliers believed they would remain profitable or break-even if the U.S. fell into a recession again. Notably, Ford and GM suppliers were most optimistic. The survey also pointed to better sourcing from manufacturers following the Japan earthquake and tsunami that devastated supply chains – will benefit U.S. operators hoping to enter or expand in the market.
- Chesapeake Energy Corp. (NYSE: CHK): Announced a joint venture on part of its Utica location this month, representing 1.25 million acres. Chesapeake values the land at $12,000 to $16,000 an acre, or roughly 40 to 50% higher than other estimates. In the past, following a joint venture announcement, CHK has underperformed 85% of the time.
- New York Times Co. (NYSE: NYT): As expected, print advertising lineage continues to decline with October already trending 15% lower. That follows year-on-year declines of 13% in September, 1% in August and 21% in July.